Canada's Failure To Actually Enforce Its Net Neutrality Rules Shows Why Focusing On Regulation Is Missing The Point

from the competition-is-the-thing dept

For many, many years we've pointed out that the debate over "network neutrality" in the US was a red herring. The discussions around net neutrality are really just a symptom of the real problem: that we lack true competition in the broadband market. Furthermore, we've noted that any attempt to put in place net neutrality regulations would likely be a failure, because of the lobbying clout of the likes of AT&T and others. The end result would be incredibly favorable to the telcos, not to the public and, in fact, we've seen glimpses of that happening already.

Adding another datapoint (or, several) to this debate is Michael Geist, who got access to information about how Canadian regulators enforced that country's net neutrality rules and discovered that regulators there basically don't enforce a damn thing. They more or less let the telcos do what they want.
Although the CRTC has not publicly disclosed details on net neutrality complaints and the resulting investigations, I recently filed an Access to Information request to learn more about what has been taking place behind the scenes. A review of hundreds of pages of documents discloses that virtually all major Canadian ISPs have been the target of complaints, but there have been few, if any, consequences arising from the complaints process. In fact, the CRTC has frequently dismissed complaints as being outside of the scope of the policy, lacking in evidence, or sided with Internet provider practices. Rogers Communications has been the target of nearly half of all cases opened in response to net neutrality complaints. In recent months, there have been multiple complaints arising from bandwidth throttling of World of Warcraft, a popular multi-player online game. Rogers initially denied any wrongdoing, only to later acknowledge that there was a problem. The company promised to address the issue, though no consequences arose and it was not forced to publicly disclose the issue.
Once again, the problem is not with net neutrality, but with a lack of competition. If you had real competition, people would choose to go with more neutral providers, forcing the market to follow. It's the lack of competition that lets telcos push for less than neutral solutions, and it's the regulatory capture that makes any attempt to legislate neutrality next to useless.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Scote, Jul 12th, 2011 @ 7:10pm

    Competition doesn't just mean more than one company

    I think it is important to note that many people mistake the idea of more than one company being in a field as real competition. We see in the US cell provider market that just isn't so. There are multiple companies, but the US still has some of the highest cell phone service rates in the world.

    So, in spite of what Mike says about regulation, regulation is important. One way we can use it to spur competition is to prohibit anti-competitive behavior, such as requiring long term contracts, especially ones with punitive Early Termination Fees. We should do that for both cell phone companies *and* cable companies. And enforce unbundling rules for hardware and services.

    reply to this | link to this | view in thread ]

  2. icon
    jjmsan (profile), Jul 12th, 2011 @ 7:23pm

    Non enforcement

    If you do not enforce regulations are there, in fact, any regulations? For example, would anyone here care about copyright if it was not enforced or only very rarely enforced?

    reply to this | link to this | view in thread ]

  3. identicon
    out_of_the_blue, Jul 12th, 2011 @ 7:27pm

    So... You're against "net neutrality" on grounds that it isn't enforced.

    "more or less let the telcos do what they want" -- Isn't that laissez-faire capitalism?

    You have no consistent position. Just two pieces away you write: "if dinosaur media organizations want to merge, let them". -- Yet here you complain there's no competition!

    reply to this | link to this | view in thread ]

  4. icon
    Jay (profile), Jul 12th, 2011 @ 7:39pm

    Re: So... You're against "net neutrality" on grounds that it isn't enforced.

    There isn't. Bells (Canada) owns the market and can enforce it however they please. AT&T does the same because of duopoly rules from 2006.

    The question that needs to be asked is how to make competition greater in the US.

    Some would say it's the abolishment of the FCC. I don't think that's necessarily the case. You would still have to go to Congress for a lot of rules to be codified, and judging from the domain seizures this would not give great results since AT&T lobbies heavily to Congress to keep the status quo.

    The best way to promote is possibly some upstart undercutting AT&T profits. The question is, when does that upstart come and change everything?

    reply to this | link to this | view in thread ]

  5. icon
    Bob Frankston (profile), Jul 12th, 2011 @ 8:18pm

    The concept of telecommunications

    The problem is not the lack of competition but the very concept of telecommunications which presumes that bits are valuable freight and tries to fund wires and radios as a profit center. This can't work because the value now lies outside the network and needs a funding model (infrastructure) that aligns incentives.

    More in or, if you want to go far deeper,

    reply to this | link to this | view in thread ]

  6. identicon
    Anonymous Coward, Jul 12th, 2011 @ 8:20pm

    Re: Competition doesn't just mean more than one company

    There really aren't multiple companies. There are many people you can buy cellphone coverage from, but the number that actually build towers is quite small, and getting smaller. They artificially inflate the cost of using towers to third party leasing companies for peering and are able to price theirs above the actual cost as well because of this. Everyone is required to price by their rules. The reason for this is because they can make more doing that, than by offering competitive prices.

    reply to this | link to this | view in thread ]

  7. identicon
    Anonymous Coward, Jul 12th, 2011 @ 8:26pm

    Re: Re: Competition doesn't just mean more than one company

    Oh, and in a lot of cases its even worse than that. The cellphone companies are really just the landline companies as well. Which means not only do you have to peer off of them if you want to lease time off their towers, you cannot build a tower yourself without paying them bandwidth fees connect your tower to the internet. One way or another, the same companies end up with part of your monthly bill to whomever you subscribe to for cellphone coverage.

    reply to this | link to this | view in thread ]

  8. identicon
    Nicedoggy, Jul 12th, 2011 @ 8:52pm

    Legislation for creation of competition is important, without it there will be no competition, not with big players being able to make exclusive contracts and not let anybody else inside, with states passing anti-competitive measures like upping the bar so others smaller ones can't enter the market, with companies being able to exclude others from the use of basic infra-structure. There are not many people who have billions of dollars to build a coast to coast infra-structure, satisfy all the regulations and still be competitive in the short term.

    Net neutrality is not about the legislation but about the will of the people to change something, it doesn't really matter what the law says if the culture behind is sane and healthy which in the case of the USA it is not and yes trying to pass legislation against the big guns is an uphill battle but without that fight, without that struggle there will be no competition in the USA anytime soon.

    Also the only thing that could happen is the big boys getting more of the same and not really changing anything.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, Jul 12th, 2011 @ 9:05pm

    Re: Re: So... You're against "net neutrality" on grounds that it isn't enforced.

    "You would still have to go to Congress for a lot of rules to be codified"

    Why have these rules to begin with? They're only intended to serve corporate interests at public expense, and that's all they pretty much rules. Just remove many of the rules and let people broadcast as they please. We can keep one emergency broadcasting frequency for government to broadcast emergencies, but that's it.

    reply to this | link to this | view in thread ]

  10. identicon
    Anonymous Coward, Jul 12th, 2011 @ 9:06pm

    Re: Re: Re: So... You're against "net neutrality" on grounds that it isn't enforced.

    Emergency alerts *

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, Jul 12th, 2011 @ 9:06pm

    Re: Re: Re: So... You're against "net neutrality" on grounds that it isn't enforced.

    and that's all these rules pretty much do *

    reply to this | link to this | view in thread ]

  12. identicon
    Michael, Jul 12th, 2011 @ 10:55pm

    nothing new

    Rogers and Bell both throttle all peer to peer and they admit it openly. They also throttle a lot of VPN traffic. The CRTC doesn't actually have much power here at all, which can be good in somecases (Windmobile being one) and bad when it comes to complaints against companies... but either way, between Bell and Rogers, they own all the bandwidth so there is little that can be done.

    reply to this | link to this | view in thread ]

  13. icon
    ottermaton (profile), Jul 12th, 2011 @ 11:45pm


    Let me point out how this is wrong, and you're just talking in circles by way of analogy:

    There are a group of gangs in your neighborhood that are running wild, causing mayhem and extorting money from the community. The gangs are the big Telco's in this example.

    These gangs have infiltrated the local cops and by way of bribe and/or coercion have persuaded the cops to leave the gangs alone or only make token arrests with no meaningful punishment. The cops are the CRTC (or FCC in 'Merica).

    And your solution is to ... get rid of the cops and/or undo the laws the gangs are violating.


    I'm am SO sick of hearing this "free market will sort itself out" argument. The guys who have caused and continue to cause the problems are suddenly just going to start doing the "right thing" if we just let them alone to do what they want? Hardly.

    Just because whatever agency has been less than vigilant in reigning in the abuse these giant corps dish out is NO REASON to remove the regulators/regulations. It WILL NOT WORK. They always have acted and always will act solely in their own best interest, public be damned. There's no magical "market force" that will stop them.

    Free markets are driven by profit. Profit can be equated to growth. And growth will invariably lead to monopolies.

    reply to this | link to this | view in thread ]

  14. icon
    Jay (profile), Jul 13th, 2011 @ 12:12am

    Re: circles

    So I'm to take it that the very valid concerns of corruption, which the GAO has already pointed out on numerous occasions or that we've seen in the revolving door policies that have been used to curry favor, are to be ignored?

    There's a lot of problems with the system, and it's mainly from how there is little accountability to what the people want.

    The regulators are making a problem worse. This is with the patent market, the copyright market, and broadband in general.

    We don't need monopolies. We need to find ways to force the stagnant market to compete again.

    reply to this | link to this | view in thread ]

  15. identicon
    Akiva, Jul 13th, 2011 @ 2:27am

    Buy some Neutrality

    Where I live (Israel), my ISP offers packet prioritization for a fee. In other words, you can go with the crowd or ride above the crowd (for an extra $10 per month).

    During high capacity times at home (evenings for example), the option to ride above the crowd makes sense to me. IT'S NICE TO HAVE AN OPTION.

    Interestingly they've done something similar on a local highway, which has a pay-for-access fast lane who's price actually changes by the level of congestion you avoid (and no speed limit when you're on it). The price ranges from $1.50 to $8.00 during peak times, where it can save you an hour in avoided traffic.

    Assuming bandwidth is not an unlimited resource, I'm willing to pay a little extra when I feel what I'm doing is important enough to warrant it.

    reply to this | link to this | view in thread ]

  16. icon
    ottermaton (profile), Jul 13th, 2011 @ 5:40am

    Re: Re: circles

    So I'm to take it that the very valid concerns of corruption, which the GAO has already pointed out on numerous occasions or that we've seen in the revolving door policies that have been used to curry favor, are to be ignored?

    Not at all. I don't even know how you could infer that from what I said.

    Yes the corruption needs to be addressed. But we need to focus on those who are causing the corruption. Those who are corrupted are also complicit, but if we just remove any kind of restrictions we're only rewarding and encouraging those who are the cause of the problem.

    reply to this | link to this | view in thread ]

  17. icon
    mattshow (profile), Jul 13th, 2011 @ 6:39am

    Without disputing that the CRTC is useless at policing these regulations, I'd say that relying on the free market to sort things out would fail even worse. The Internet access industry isn't like other industries. There is a HUGE barrier to entry: at some point, you have to run some sort of cable to the consumers home (unless you're talking about wireless access, which Geist wasn't). Running these tables is obviously a massively expense undertaking. And do we really want/need a different cable going into our homes for every Internet access provider? Say I hate my ISP and want to change. I call up one of their competitors and they tell me "Sure, but you have to wait a year while we dig up your neighborhood to run a cable to your house". Is that really "competition"?

    So instead, we have a system where independent ISPs basically just resell bandwidth that they buy from the telcos and cable companies, using the cables that already exist. This gives the telcos and cable companies a lot of power to limit any new competition either by pricing this bandwidth ridiculously high, or by shaping the traffic flowing upstream from the independent, which affects the service the independent can offer to their customers.

    Without some form of regulation, if the telcos and cable companies decide they want to traffic shape, then there's nothing the independents can do about it. No new competitor can just pop up and start offering non-shaped access. It's a situation where we need regulation in order to promote competition.

    The CRTC complaint system sucks for two reasons. First, it doesn't prohibit traffic shaping, it just says the ISPs have to disclose that they do it. So the solution to many complaints is "Oh, there was inadequate disclosure. The ISp doesn't have to stop doing it, they just have to be better at disclosing it".

    Secondly, it puts the burden of filing complaints on the consumer, then requires them to provide evidence. The average consumer isn't capable of obtaining and providing evidence sufficient to satisfy the CRTC. So you see complaints which consist of nothing more than "My internet access is slow", which the CRTC dismisses for lack of evidence.

    reply to this | link to this | view in thread ]

  18. icon
    Jim O (profile), Jul 13th, 2011 @ 6:53am

    Re: So... You're against "net neutrality" on grounds that it isn't enforced.

    It doesn't matter if the media organizations become conglomerates because the internet allows for anyone to become a news source. There is near limitless competition in the news distribution business.

    With the telcos, there is very little (often no) competition so people have no option to switch providers if they don't like the policies of Rogers.

    How can you not see the difference here?

    reply to this | link to this | view in thread ]

  19. icon
    Jim O (profile), Jul 13th, 2011 @ 7:00am

    Re: Re: Re: circles

    It's very hard to force the only service provider in town to be good. If a monopoly power really wants to screw their customers they will find a way - it is very hard for regulators to keep a sharp eye on a telco.

    Mike's (and Jay's) argument is that if there were multiple providers then people could just switch to the one they liked best, forcing the Rogers/Bells/Comcasts of the world to change the way they treat people.

    The "regulation method" is ineffective, discourages growth, expensive (who pays the regulator), and has high risk of corruption (easier to pay off the regulator than to change).

    reply to this | link to this | view in thread ]

  20. identicon
    John Nemesh, Jul 13th, 2011 @ 8:47am

    One HUGE problem is what our Congressmen and Senators view as competition. I have listened to discussions in Congress where they say "oh, its ok, they have access to DSL, wireless AND satellite!". The reality is that wireless and satellite are unacceptable for regular home use! Incredibly low caps and dismal speeds...but hey! Its a choice!

    I really wish they would wake up to the fact that over 3/4 of the US has one or MAYBE 2 choices when it comes to broadband...maybe then they would see a problem with how the big incumbent providers behave towards their own customers. (with contempt and huge rate increases on a regular basis!)

    reply to this | link to this | view in thread ]

  21. icon
    jenningsthecat (profile), Jul 13th, 2011 @ 9:31am

    Re: The concept of telecommunications

    Ah, but the problem IS a lack of competition. If the market were truly competitive, then some new company would realize the fallacy of 'bits are valuable freight', would offer an appropriate service in response, and would force competitors to either follow suit or lose most of their market share.

    At the heart of the lack of competition, is the history of governments granting 'special monopolies'. This was probably the only viable way to create the far-reaching telecommunications infrastructure we now enjoy, but the deals should have been structured differently. For example, Bell, should have had a time limit on network ownership, after which time the ownership passed on to the government. There still would have been LOTS of money to be made both before and after the transfer of ownership, but we wouldn't now be in the position of paying through the nose for infrastructure we've already paid for. Also, government ownership of the infrastructure would ensure lots of competition - anyone with a viable business plan and a few dollars could start an ISP business, and there would be no question of UBB, throttling, or other such cash-grab anti-competitve ploys on the part of those in charge of the infrastructure.

    reply to this | link to this | view in thread ]

  22. icon
    jenningsthecat (profile), Jul 13th, 2011 @ 9:44am

    Re: circles

    I agree with most of what you say, but I think you're missing an important point. We REALLY DON'T KNOW what we would have in a free market, because we haven't seen one in a very long time, if ever.

    What we have now, and have had for many decades, (if not for a century or more), is corporatism, along with its attendant lobbying and back-room deals. Corporations would like you to believe that they represent a 'free market'; this belief hides the fact that corporatists are actually collectivists, rather than the individualists that they claim to be.

    A free market may or may not solve a lot of the problems that are discussed on Techdirt - we'll never know until we try. BTW, there's no fundamental conflict between a free market and a certain level of government regulation, in spite of what the corporations would have us believe.

    reply to this | link to this | view in thread ]

  23. icon
    ottermaton (profile), Jul 13th, 2011 @ 11:35am

    Re: Re: Re: Re: circles

    Who's in favor of monopolies? Certainly not me. It's strange that you're twisting what I'm saying into that. Or maybe it's just easier to prop up strawman.

    What I am saying is that our "free markets" lead to monopolies and that we must regulate them in order to prevent this. We don't regulate them enough and look what they're doing. And somehow the answer is to stop regulating them?!? Really?

    Yea. Sure thing. They're already doing lots of bad stuff. Let's just remove all restrictions - I'm sure they'll behave.

    reply to this | link to this | view in thread ]

  24. icon
    ottermaton (profile), Jul 13th, 2011 @ 11:59am

    Re: Re: Re: Re: circles

    Oh, let me address this while I'm at it:

    The "regulation method" is ineffective, discourages growth...

    You say this as if it's a bad thing, but the fact of the matter is that discouraging growth should be exactly what regulation does. It's not, it wasn't designed to, but it should.

    Our economy depends on growth, and the myth that growth is infinite. The fact, however, is that it's not. It can not be. There is no such thing as an infinite resource, and an economy is just an abstract representation of resources. Oil (which has in effect taken the place of gold as the backbone of the economy) is definitely not infinite. Not land. Not water. NOTHING.

    Sure, there are resources that are sustainable. Land for farming is an example. Compost, rotate, etc and you can keep using that land forever. The problem is that as growth continues the land has be used harder (less time to restore the nutrients) and can no longer be sustained. You can open up more land to farm, but at some point you ARE going to run out.

    Air (and to extent water) seem to be infinite, but in reality are not. The industry growth that you're so fond of can, will, and is poisoning them both and making them unusable.

    Yes, by all means. Let's continuing growing so that we can keep and expand our luxurious lifestyles. Let's just keep pushing it, keep selling the idea of growth and that everyone can be rich if they just try hard enough, until everything is used up and there's NOTHING left.

    reply to this | link to this | view in thread ]

  25. icon
    ottermaton (profile), Jul 13th, 2011 @ 12:14pm

    Re: Re: circles

    Thanks jenningsthecat, appreciate your comments.

    I think you're right that we don't have a truly free market, that we haven't had one in a while, and that what we have now is corporatism.

    Where I think we may differ, however, is how we got here. You say that it's been decades or more since we had a free market, so the implied assertion is that we did at one time. So, how did we get from there to here? My opinion is that a free market will cause what we're seeing today. I think monopolies were being created and that people realized what a Bad Thing this would be so they tried to regulate to prevent it. However, the corporations were able to infiltrate and corrupt the regulation process.

    I just don't think there's any way to avoid this happening if you allow a free market to run loose. They are always going to head toward monopolies and will always gain the power/influence to subvert the system.

    In the end, I think we really DO know what a free market will do.


    reply to this | link to this | view in thread ]

  26. icon
    jenningsthecat (profile), Jul 13th, 2011 @ 1:54pm

    Re: Re: Re: circles

    Yes ottermaton, I agree with what you're saying - power tends to do whatever it can to perpetuate itself and to increase its sphere of control. What we need, (and this is probably a pipe dream), is a way of regulating corporations that can't be so easily infiltrated, corrupted, or outright ignored.

    This brings me to the legal concept of a corporation as a person. If we could do away with this bit of legerdemain, and fix all the laws that accord individul rights to corporate collectives which have no real locus of accountability, we could go a long way toward bringing corporations to heel. And I believe that all of this, in turn, hinges on electoral reform - we need to return to government 'by the people, for the people', and that means major restrictions on how much money, and whose money, can be spent on election campaigns. As it is, North America is ruled by corporations, and elections are the modern-day equivalent of 'bread and circuses'.

    reply to this | link to this | view in thread ]

  27. identicon
    Anonymous Coward, Feb 23rd, 2014 @ 11:23pm

    Re: So... You're against


    reply to this | link to this | view in thread ]

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